New pilot will use open banking technology to calculate affordable savings for self-employed customers by understanding their monthly income and expenses
Penfold, the digital pensions platform, has today announced its partnership with Nest Insight, a public-benefit research and innovation hub, to launch a pioneering pilot to help self-employed people save for retirement.
While individuals with an employer are automatically signed up to a workplace pension, for self-employed people, the responsibility for saving for retirement lies solely with themselves. Self-employed pension savings hit a record low last year, with workers contributing £830 million, down from £1.15 billion the previous year.
This new auto-save pilot will use open banking technology in order to calculate affordable savings for self-employed customers, with people able to securely connect their bank account to Penfold and select a percentage of their excess income to save. Penfold will then be able to automatically analyse a saver’s monthly income and expenses and use this data to help engage savers and encourage those with excess monthly income to save more into their pension.
Savers will have full control of their pension pot and can increase or decrease the amount they want to top-up their pension each month or decide not to top up at all.
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The pilot, which is supported by the Department for Work and Pensions (DWP), will test different forms of flexible savings solutions and will also use technology to urge self-employed workers to save at certain moments, such as when they receive a large payment.
If successful, Penfold plans to extend the pilot from being able to connect one bank account to allowing savers to share more details of their finances to enable more accurate saving suggestions. The pension provider is also considering expanding the pilot to use gross income, rather than excess income, to calculate savings amounts. This would allow self-employed people to automatically save a fixed portion of their income in their pension on a monthly basis, similar to how those with salaried jobs benefit from auto-enrolment and workplace pensions.
The outcome of the pilot will be analysed by Nest Insight and publicly shared next year.
Chris Eastwood, Co-founder and Co-CEO of Penfold, said: “We’re delighted to be working with Nest Insight on an innovation that should level the playing field between self-employed savers and the wider working population, giving those with variable finances the flexibility they need to set easy and clear rules for their savings.
“We want to equip everyone, regardless of their employment status, with the tools and resources to save enough for life after work. Self-employed people often have to contend with variable and uncertain incomes, meaning they need greater flexibility when it comes to saving for retirement and this is one of the main reasons why Penfold was founded.
“With this new solution, we are making pensions easy. This technology will allow us to automatically calculate affordable savings that are tailored to each individual and will allow them to have complete control over their pension payments to suit their own needs. With the nature of work changing, this level of flexibility and accessibility needs to be part of all future pensions products.”